Typical! The day that President Trump’s choice as chairman of the US Federal Reserve is sworn in, Jerome Powell gets hit with a very serious stock market slump. The Dow Jones Industrial Average closed down 1100 points on the day, a record daily loss, having been off 1500 points earlier. Over in Japan the leading Nikkei 225 index at one point fell a whopping 7.1 per cent (the biggest loss since 1990) and ended today’s session off an equally ugly 4.7 per cent. CNBC reports that experts say that solid economic fundamentals lie below the moves despite the sea of red ink.
The communications department of Swiss investment bank said yesterday that ‘there is no impact to Credit Suisse – we are completely hedged’. This in reply to rumours that its notorious XIV ETN, which allowed investors to short implied volatility, had suffered massive losses.
DAX 30
Overnight price action on IG index looks suspect indeed. Just goes to show what mass panic does in thin markets.
SHORT TERM TRADER: Took 400 pips profit. Not bad for a day’s work. Planning to re-sell at some point this week.
POSITION TAKER: Another 700 pips profit here yesterday, and thank you very much. Planning to re-sell as close to the 12700 area where we gapped below long term trend line support.
FTSE 100
Now they wake up to what could and does happen when the thundering herd gets a fright. Blame it on whatever one wants while keeping an eye on what’s happening in the ETF sphere.
SHORT TERM TRADER: Square and looking to go short.
POSITION TAKER: Took profit at target 7200 far sooner than hoped – but I’m not complaining. Now will try and re-sell around there again.
S&P 500
Remember: price action in all asset classes is asymmetrical. When push comes to shove the fire exits are very small and investors are forced to sell their silver to meet margin calls on the tat.
SHORT TERM TRADER: New little short yesterday on the afternoon tiny rally to 2760. Will now use a stop on this position at 2725 and a profit target around 2500.
POSITION TAKER: Took profits yesterday at 2620. My, such quick work.
BRITISH POUND/US DOLLAR
An A, B, C-type correction from this year’s high has corrected nearly half of this year’s rally. We expect it to base close to current levels for another upside attack this month.
SHORT TERM TRADER: New tiny long at 1.3975; stop below 1.3800. First target 1.4250.
POSITION TAKER: Square and looking to re-buy.
EURO/US DOLLAR
Re-drawing triangle consolidation and pleased at how well the euro’s holding up. Yesterday the ECB told the European Parliament that they were confident inflation would reach their target but that currency volatility is a potential obstacle. I think they must mean currency strength, but aren’t allowed to say that.
SHORT TERM TRADER: Small long at 1.2425; stop well below 1.2300. Target 1.2600.
POSITION TAKER: Long at 1.2200; stop below 1.2290. First target 1.2600, then maybe 1.3000.
GOLD
Still holding just under long term trend line resistance as investors debate whether gold still maintains safe-haven status.
SHORT TERM TRADER: Small short at 1335; stop above 1366. Target 1280.
POSITION TAKER: Square.
Nicole Elliott is a long-standing Member of the Society of Technical Analysts and has taken over the IC’s trading coverage. She is regularly interviewed and quoted by the financial media, is a conference speaker, and author of several books on charting.
